Internation Trade

7/23/2019 Internation Trade

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PROJECT OF INTERNATIONAL

ECONOMICS IN BUSINESS

SUBMITTED TO:

Prof. Mahima Sharma

SUBMITTED BY:

GROUP: 6

Ayaz (FS11)

Mah!"riya Mi#hra (FS1$)

Mihir (FS%1)

Moh. Shahi (FS%%)

A) I&TRODU'TIO& A&D OBE'TIE OF STUDY:



The economic relationship between Australia and India has developed rapidly in recent years, particularly under the impetus of India’s far-reaching process of economic reform and theresulting rapid globalization of the Indian economy. In recognition of the growing synergies between the two economies, and the commitment on both sides to further enhance the economic partnership, Australia and India agreed in August 2! to underta"e a feasibility study for a

possible bilateral #TA. This would help inform a subse$uent decision by the two %overnmentsabout whether to proceed to #TA negotiations. In doing so, the study is without pre&udice towhether possible future #TA negotiations between Australia and India would ta"e up all issues inthe forms considered in the study.

Terms of reference 'T()* for the study were developed and are set out in Anne+ A. eyelements of the T() are

* To identify the benefits that India and Australia would derive from a /T(-consistent#TA.

2* To assess the feasibility of a comprehensive #TA covering goods, services and investmentas well as other cross-cutting issues such as intellectual property, sanitary and

phytosanitary issues, technical barriers to trade, competition policy and government procurement0* To assess prospects for e+pansion of trade in goods through liberalization of tariffs and

non-tariff measures1* To assess prospects for e+pansion of trade in services across a substantial range of

sectors, including through labor mobility and encouragement of mutual recognitionarrangements

* To e+plore how to create a favorable environment for investment in both directions3* To produce a report for consideration by %overnments in the first half of 24 or earlier.

A #ree Trade Agreement '#TA*, for the purposes of this 5tudy, has a wide coverage includinggoods, services and investment. In India, #TAs are commonly understood as goods-onlyagreements whereas a 6omprehensive 7conomic 6ooperation Agreement '676A* includesgoods, services, investment and other areas of cooperation. In Australia, #TAs are understood ascomprehensive agreements.

B) a*!+ of +,"or-#:

7+ports in Australia increased to 2!210 A89 :illion in 9ecember of 21 from 23;34 A89

:illion in <ovember of 21. 7+ports in Australia averaged 4220.3 A89 :illion from 4!

until 21, reaching an all-time high of 242;; A89 :illion in #ebruary of 21 and a recordlow of 10 A89 :illion in (ctober of 4!.

)ich in natural resources, Australia is a ma&or e+porter of commodities. :etals li"e iron-ore and

gold account for 2; percent of total e+ports, coal for ; percent and oil and gas for 4 percent.

:anufactured goods constitute 00 percent of the total e+ports with food and metal products and

machinery and e$uipment accounting for the biggest share. Agricultural products, particularly

wheat and wool ma"e up percent of trade outflows.



• Australia=s largest e+port mar"ets are

• 6hina '2! percent of total e+ports*,

• >apan '! percent*,

• 5outh orea '! percent*,

• India '3 percent* and

• the 7uropean 8nion countries

Im"or-+r#

E,"or-+

a*!+ i/

%00$

E,"or-+

a*!+ i/

%010

E,"or-+

a*!+ i/

%011

E,"or-+

a*!+ i/

%01%

E,"or-+

a*!+ i/

%01

/orld1,1;,42

;

13,4,!

2

,!!,0

0,21,04

2

0,31,!1

1

Asia-

?acific

7conomic

6ooperatio

n 'A?76*

20,,1

3

2!,2;1,3

;

0,!2,;

;

02,1,;

02,0;,!0

2

7uropean

8nion '78

2!*

3,!0!,34 !,4,11 ;,204,30 ;,304,13 ;,!12,330

Associatio

n of 5outh-

7ast Asian

<ations

'A57A<*

3,230,2 !,10,4 ;,!;3,0! ;,!0!,;2 ;,4!,;0

6hina 1,;2,!; ,042,!;3 3,00!,24 3,;,;! 3,31,42

8nited5tates of

America

1,22,;0 1,323,;11 ,00,43! ,1!,23 ,!20,;!

8nited

ingdom0,3,!!; 0,1!;,0;; 0,;4,31 0,41,!! 0,;10,2;



India 2,31!,;1 2,3;4,0 2,0!,130 ,4;!,4;! ,;0,3;

@ong

ong,

6hina

,2,24 ,13,03 ,30,;0 ,!0!,1; ,!!,441

orea,

)epublic

of

,12;,2 ,!!1,2 ,;2,32! ,;1, ,33,;

:alaysia ,212,13 ,1,30 ,33,;! ,!,10 ,3,13

Indonesia ;24,;0 ,2,;3; ,20,!03 ,;3,; ,0!,21

%ermany ;!,4! 430,3 ,4,;0! ,1,1! ,1,2!

iet <am 44,! ;1,134 404,34 413,03 43;,243

5witzerlan

d322,0!0 !!;,!; ;;,34 3!,4; ;0!,43!

Thailand !;,1! ;!,102 432,0;; ;3,2;1 !!3,;2

') a*!+ of im"or-#:

E,"or-+r#

Im"or-+

a*!+ i/%010

Im"or-+

a*!+ i/%011

Im"or-+

a*!+ i/%01%

Im"or-+

a*!+ i/%01

Im"or-+

a*!+ i/%012

/orld;;,!1,33

201,2,;2

02,131,!4

1202,1;,2!

22;,!1,!

!

Indonesia 1,!!0,234 3,4;,;1 3,1,44 ,!2,;!2 ,!1,3!2

8nited ingdom ,22,3;0 3,404,0 3,40,12 ,431,;03 ,14,;



Italy 1,04,101 ,;,; ,0,; ,03,0;3 ,111,;

iet <am 2,;;,21! 2,43,1 0,230,0! 0,33,1 1,;,

Taipei, 6hinese 0,2,402 0,;43,4 0,;!,3 0,,!;0 0,4!1,01

#rance 0,100,! 0,;3!,;1 0,413,1! 0,;10,;0 0,;1,320

?apua <ew %uinea 2,!,23; 0,!4,;4! 0,1!,23 2,;40,40 0,0,;!3

5pain ,1;,2;! ,;4,44; 2,4;,;43 2,1!,13 2,!;3,12

India ,!3!,04 2,24!,03 2,3!!,1! 2,2;2,00 2,!!1,4;!

5witzerland ,4!!,;33 0,3,3!1 2,4;4,4;3 2,;3,! 2,1,;1

8nited Arab 7mirates 2,0,1! 1,23,; 0,2,!! 0,3,;; 2,22,100

D) Dir+3-io/ a/ "a--+r/ of +,"or-# from I/ia i/ *a#- 4 y+ar#:

India’s merchandise e+ports reached a level of 85B !;.! billion during 24- registering a

negative growth of 0. percent as compared to a growth of 0.3 percent during the previous year.

<otwithstanding the deceleration of the growth in 24-2, India’s e+port sector has e+hibited

remar"able resilience and dynamism in recent years. (ur merchandise e+ports recorded a

compound annual growth rate '6A%)* of 22. per cent during the five year period from 21-

to 2;-4 as compared to the preceding five years when e+ports increased by a lower 6A%) of

1. per cent. According to latest /T( data '24*, India’s share in the world merchandise

e+ports increased from .; per cent in 21 to .0 per cent in 2;. India also improved its

ran"ing among the leading e+porters in world merchandise trade from 0th in 21 to 2st in

24.

India’s e+ports have not been affected to the same e+tent as that of other economies of the world

during the phase of global slowdown. After declining consistently for the first seven months of

the year 24-, India’s e+ports reversed the trend in (ctober, 24 by registering a positive

growth of 0.1C. The upward trend has been maintained since then wherein e+ports grew at the

rate of 0. C in <ovember 24D 2.0C in 9ecember, 24, ;.!C in >anuary, 2, 01.;C in

#ebruary, 2D 1. C in :arch 2, 0;. C in April 2, 0. C in :ay 2, 10.;C in

>une 2, .! C in >uly 2, 22.C in August 2, 20.2 C in 5eptember 2, 2.0C in

(ctober, 2, 23.C in <ovember 2 and 03.1C in 9ecember 2. 'Table 2.* The e+tent

of sustained recovery of e+ports would ultimately depend on the strength of the recovery of

global demand.



Ta5*+: %.1Mo/-h7i#+ +,"or-# from &o+m5+r8 %00$ -o D+3+m5+r8 %010

Mo/-h P+r3+/-a9+ 9ro7-h

<ovember, 24 0.9ecember, 24 2.0>anuary, 2 ;.!#ebruary, 2 01.;:arch, 2 1.April,2 12.:ay, 2 01.>une, 2 13.

>uly, 2 0.;August, 2 20.05eptember, 2 20.;(ctober, 2 2.0 <ovember, 2 23.9ecember, 2 03.1

5ource 9%6IE5

The %overnment had set an e+port target of 85B ! billion for 24-. /ith merchandise

e+ports reaching 85B !;.! billion in 24-, the actual e+ports e+ceeded the target by 2. per

cent which is a remar"able achievement during a period of recession in India’s ma&or e+port

destinations.

E) To" 3omm oi-i+# of +," or -#-o-h+ 3o! /- ry

9i sagg regated da tao ne+ports by? rincipal6 omm odi tiesindol lar terms forthe period 2 -'Apr ilF5e ptembe r*as com pa redwi th the cor responding pe riodo fthepr evi ous year aregiven in Appendi+ 2 E2.2. 7+por tsdur ingt he period Apr -9ec 2- regi steredag rowth of 24Cin 85B terms

P*a/ -a-io/ 'ro"#

7+p ortofpl ant ation crop sdur ing2 -'Apr ilF 5ep* increased by 2;. percent in 85B termscomp ared withthe cor respon dingpe riod ofthe previous ye ar7+p ortof6 offee regi stereda growth of10.2 pe rcent thevalue inc reasing from 85B 40.1 million to 85 B2!!mi llion. 7+p ortofTe aalso inc reased b y!. pe rcent

A9r i3!*-!r+ a/ A**i+ Pro!3 -#Agr iculture and Allied ?roduc tsas agroupinc lude cere alspul ses toba cco, spices, nut sand seeds,o ilme alsgua rgu m me alscastor oil she lla csuga rEm olasse sproc essed foo d, meatE me atproduc tsetc. 9ur ing2- 'Apr ilF5 eptembe r* e+p or tsofcomm od itiesunde rthi sgrou pregiste red agrow thof 3p ercent withthe va lue ofe+por tsgoingu pfrom85B ,;1 3m illionin the previousy ear to 85B 3!3m illion dur ingthe cur rent ye ar

Or +#a/Mi /+ ra* #

7+p ortsof oresandm ineralsw ere estimated at8 5B1 1milliond uring 2- 'Apr il-5ept ember* regi steringa growth of 01pe rcent ove rthesame pe riodo fthepr evi ous year. 5ubgrou psv iz?roc essed :ine ralsrecorde d agrow thof. 3pe rcent and6oa lha sanega tive growth of10p ercent respe ctively. 7+p or tof:ica hasr egi ste redgrowt hof !; percent

:+a- h+ra/ :+a- h+ rMa/!fa3 -!r +#



7+p ortoflea the rand leather manuf actures recorde d agrowth of1 per centdur ing 2 - 'April-5 ept emb er*The va lue ofe+ports inc re ased to85B ;00. 1mi llionfrom 85B ,3 2mi llion duringthe same pe riodofthe pr evi ous year.7 +por tsof leatherand ma nufactur eshaver egi stered agrow th of3p ercent and Geathe r#oot we aralso r egi ster ed agrowth of. !pe rcent

G+m# a/( +7+ *ry

The e+port ofgemsa nd ewelry dur ing 2- 'Apr il-5eptembe r*inc reas edto85B , 331 million from 85B0,! !mi llion during thec or respo ndingp eriod of lastyear sho wing agrowt ho f0.4 percent

'h+ mi3a*# a/R +*a- + Pro!3 -#

9ur ingthe period 2 -'Apr il-5ept embe r*the va lue ofe+por tso fchemi calsand all ied products inc rea sedto 8 5B 0441 million from 85B 432.2 mi llion duringthe same pe riod ofthe pr evi ousye arregi stering agrow th of2!.! percent )u bbe rglassand othe rproduc tsr esidua lchemi cals anda lliedprodu cts and basicchemi cal sph armaceut icals and cosmetic sand pl asticElino leum have also regi ste redapos itive grow th

E/9 i/++ri/9 Goo #

Items unde rthi s group consist ofma chinery, iron Es teelando the rengi ne eringi tems 7+po rtfrom thi s sectordur ingt he pe riod2- 'Apr il-5eptembe r*s too d at85B20, 4. 2mi llioncompa red with 8 5B, !30 million during the samepe riod ofthe previous ye arregistering agrow thof13 pe rcent 7+port ofma chi ne toolshaver egi ster edan ega tiveg rowthof 2p ercent andtrans por te$uipme nt shave registered growt h of3;p ercent :achinery E ins trument s'. C* ironE steel '30.4C *and othe rengine ering items '4.;C *have regi stereda positiveg rowth

E* +3-ro/i3 Goo#

9ur ingthe period 2 -'Apr il-5ept embe r*e+po rts ofelectroni c goods asagrou pwe ree stimated at85 B01!m illion comp ared w ith 85B 03!mi llion during thecor respon ding period oflast yearregi ster ing apositive grow th of43pe rcent

T+,- i*+#9ur ingthe period 2 -'Apr il-5ept embe r*the va lue ofte+t iles e+p or tswasestima ted a t85B,22 millioncompa red with85B 4243 mi llion inthe cor respon dingpe riod ofthe previous ye arrecordinga grow thof per cent Thee+por tof na tur alsil" t e+t ile sregistered a nega tivegrow tho f.3 percent and manm adete+t iles Emad eups hassho wn apositive grow th ofpe rcent

;a/ i3raf-# a/ 'ar"+ -#

7+p ortsof handi crafts declined to 85B;mi llion dur ing 2- 'Apr il-5 eptembe r*,f rom 85B2.3 mi llion dur ing the cor responding pe riod ofthepr evi ous ye arregisteringa nega tivegrow tho f!1pe rcent 7+p ortofc arpe ts inc reasedto 85B 12;.; million from 85B04. 1m illion during thes ame periodlast ye arregi stering apos itive growth of01. 0pe rcent

P+ -ro*+!m Pro! 3-#

7+p ortofpe trol eum products inc rea sedto85 B!, ;! million during 2 -'Apr il-5 eptemb er*as com pa redwi th 85B ,! 41mi llion dur ing thesamep eriod oflasty earr ecordi ngagrow th of33pe rcent

'o- -o/Ra7 i/3 *! i/9 <a#-+

The rewas agrow th in thee+po rts ofcotton raw inc ludi ngwa steby 0.3 percent from 85B 2;!mi llion in24- 'Apr il-5eptembe r*to 85B 0;mi llion dur ing 2- 'Apr il-5 eptembe r*

E,"or- D+#-i/a-io/#



9uring the period 2- 'April-5eptember*, the share of Asia and the A57A< region

comprising 5outh Asia, 7ast Asia, :id-7astern and %ulf countries accounted for 0. per cent of

India’s total e+ports. The share of 7urope and America in India’s e+ports stood at 2.2 per cent

and 3. per cent respectively of which 78 countries '2!* comprises ;.3 per cent. 9uring the

period, 8nited Arab 7mirates '8A7*'0.3 per cent* has been the most important country of

e+port destination followed by 85A '. per cent*, 6hina '.0 per cent*, @ong ong 6hina '1.

per cent*, 5ingapore '1.1 per cent*, 8.. '0. per cent*, <etherlands '0. per cent*, %ermany '2.3

per cent*, >apan '2.1 per cent* and Helgium '2.0 per cent*.

F)Dir+3-io/ a/ "a--+r/ of im"or-# i/ I/ia i/ *a#- 4 y+ar#:

Imports during 2009-10 were US$ 288.4 billion as against US$ 303.7 billion during2008-09 registering a negatie growt! o" #.1 per ent in %ollar terms. &il importswere alued at US$ 87.1 billion w!i! was '.# per ent lower t!an t!ose alued atUS$ 93.2 billion in t!e preious (ear. )on-oil imports were US$ 201.2 billion w!i!was 3.4 per ent !ig!er t!an non-oil imports o" US$194.' billion in t!e preious(ear.

%uring 2009-10 trade de*it delined marginall( as t!ere was a mild reoer( ine+ports and a marginal deline in imports.

,!e trade de*it in 2009-10 was US$ 109.' billion w!i! was lower t!an t!e de*ito" US$ 118.4 billion during 2008-09.

er"ormane o" +ports/ Imports and alane o" ,rade in upees during 2004-0# to2010-11 pril-%e is gien in t!e ,able 2.2.

G) To" 3omm oi-i+# of im" or -#-o-h+ 3o!/ -ry:

Fert ilizers%u rng201 0- 11p r-Sep temb er/mp or to" "er t5ers ma nu "atured nr eas edmargi nal (to U S$ 3/492 .1mion "rom US$3/0' 4 mion n pr-S ept ember 2009 -10reo rding agrowt! o" 14p erent .

Pet roleum Cru de &Produ ts,!e mpor to" pet rol eum rude 6produ ts stoo datUS $4 8/'19 .2mi on durng pr -S eptembe r2 010- 11agai nst US$ 37/47#. 4m on durng t!e sa meperod o"t!ep reiou s (earregi ster ng agrowt! o" 29.7 peren t.

Pe! rls"Pre iou s !#dSem i$P reious Sto# esmpo rto" pears a ndpreiou s andsem -p reiou sstone sd urng 2010- 11 pr -Septemb er nreas ed to US$12/49 #.3 mi on"rom U S$ #/4#8mi on du rngt!e or res pondi ng perod o"t!e prei ou s(ear regi sterng agrowt ! o" 129per en t.,!e main reas on"or t!e !g! growt! n t!e mp orto "pea rs/ preous an dsemi -prei ous stones st!eb aseee t .,!es earep rnipa om mod tes o"e+po rt !aing a!ig!i mp or tonten t.



C!% it!lo odsmpo rto" api tal goods/lar gel (ompr ses ma !ner( ot!er t!a nele tral /n udng trans port euipm en t/eet ral ma !ner(/ ma !i netools/ no n- eetral ma !ner(/ ele tra ma! ner (a ndtransp or teu pment regi sterng ag rowt! o"19.' pe ren t/1#.4 per en t/7.3p er ent /and- 37.1 peren tresp et e(.

Or' !#i! #d I#o r' !#iC (em i!ls%u rng201 0- 11p r-Sep temb er/mp or to" organ and norga n !emi als nreas ed to US$ 7/170 mi on"rom US$ #/'#9.3 mi on durng t!e same perod o"ast (ear/reg ster nga growt ! o"2'.7 per ent .Impor to"m edii naan dp !armae uta lp rodutsnr ea sed toUS$ 1/19 9 mon "rom US$ 991.9 mi ondurng t!e orrespon dingp erodo" ast (ea rregster ng a growt!o "20. 9per ent .

Co! l"Co)e & Bri*u ettes%u rng201 0- 11p r-Sep temb er/mp or to" oaoe an db ruettes nr eas edto U S$ #/081.4# mi on "romUS $4 /201 .72mi on durng t!e sam ep erodo" ast (ear/regi ster ng agrowt ! o"20 .94per en t.

Art i+i!l Resi #smpo rto" art* al resnsnr ea seddur ng 201 0-11pr -S ept ember to US$ 3/48#.12 mi on"rom US$ 2/400.41 mi on durng t!e or res pondi ng perod o"ast (e arregist ernga growt! o"4 #.19 peren t.

,ire tio# o- I#di !. sForei '# Tr! deS!a reo"m a:or des tnaton o"nd a;s e+p or ts andsour es o"mp orts durng2 010-11 pr -Septem be ra regen n <!ar t2.7an d2 .8res petel (.

Soure o- I#di!.s Im%ortssia and S) aounted "or '1.# per ent o" India;s total imports during t!e period

"ollowed b( urope 17.3 per ent/ U <ountries 11.8 per ent and meria 10.2 per

ent. mong indiidual ountries t!e s!are o" <!ina stood !ig!est at 11.9 per ent

"ollowed b( U 7.# per ent/ Saudi rabia ' per ent/ US#.3 per ent/ Swit5erland

#.1 per ent/ ustralia 3.# per ent/ =erman( 3.3 per ent/ )igeria 3.1 per ent/

Iran 3 per ent and >orea 2.9 per ent.



;) I/ia=# 5a*a/3+ of -ra+ 7i-h -h+ a##i9/+ 3o!/-ry i/ *a#- 4 y+ar#:



'o/3*!#io/:

S.No. \Year 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014

. E>PORT 3,;4. !;,24!.31 ,44,2.4; ,2!4,0;.14 ,04,;1;.30

2. C%rowth ;.4! 0.33 3.! 4.

0. India=s Total

7+port

;1,0,031.0; 0,343,123.0; 13,4,404.43 30,10,;2;.43 4,,;.;3

1. C%rowth 01.1! 2;.41 .1; 3.3

. C5hare .!; .34 .;2 .!; .!0

3. IMPORT ,;33,44.! 1,4;,!.;0 !,13,43.4 !,2,!.43 ,;4,!4.

!. C%rowth -3. .! -1.3 -!.2

;. India=s Total

Import

03,0!0,1.!3 3;,013,34.! 201,13,021.1 233,43,4.34 2!,10,04.!1

4. C%rowth 20.1 04.02 0.; .!0

. C5hare 1.0 2.42 0.; 2.3! 2.!

. TOTA

TRADE

3,22,41.; ,344,0.1! ;,33,4;0.;4 ;,1,4.1 !,24,3!.3;

2. C%rowth -2.32 .4! -0. -0.2

0. India=s Total

Trade

22,423,44.1 2;2,10,2.43 0;,12,231.1 10,01;,21.3 132,11,144.3

1. C%rowth 2!.33 0.1 2.4 !.0!

. C5hare 2.4 2.2 2.2! .4 .;

3. TRADE

BAA&'E

!. India=s Trade

Halance

-,;2,4.0; -1,3,234.4 -;!,4,0;1.14 -0,1;1,033.!2 -;,12,2;.;;



India’s e+port to Australia contributes to around .!0C of India’s total e+port in year 20-

1where as India’s import from Australia contributes to 2.! C of India’s total import in same

year. India’s balance of trade for Australia shows the trade deficit as India imports more from

Australia in comparison to what it e+ports there.

#rom a bilateral trade perspective, India-Australia trade is much less discussed than India-6hinatrade. As two of the Asia-?acific region’s largest economies, India and Australia are e+pected tohave robust e+changes. 5tatistics provided by the 9irectorate %eneral of 6ommercialIntelligence and 5tatistics '9%6I5* in India support this e+pectation. The latest country-wisetrade data giving information until the first three $uarters of the financial year 24- showsAustralia as India’s eighth largest goods trade partner. /ith bilateral trade amounting to B4.! billion for the period, Australia accounted for about 0 per cent of India’s total goods trade. India’strade with Australia, however, is much less than its trade with its top three partnersD 6hina 'B24.4 billion*, 8A7 'B2;.1 billion* and the 85 'B2. billion*. 9uring 2;-4 Australia’s share inIndia’s total trade was 2.3 per cent. The balance in bilateral goods trade is in Australia’s favor.

Almost 4 per cent of India’s bilateral trade comprises of imports from Australia. 5witzerland isthe only other country among India’s top ten trade partners with which India’s trade shows agreater proportion of imports '4.! per cent*. In this respect, imports dominate India’s trade withAustralia and 5witzerland much more than with 6hina.

The imbalance in India-Australia trade is hardly surprising. It reflects India’s dependence onAustralia as a vital source of energy and mineral resources. 6oal accounts for more than 1 percent of India’s total imports from Australia. 5emi-manufactured non-monetary gold is anothervital import. Ta"en together, coal and gold comprise more than ; per cent of India’s annualimports from Australia. %old and coal trading between Australia and India have a long history,with the first Australian ship carrying coal hitting Indian shores more than two centuries ago.

/hat is the future for India’s trading relationship with 6hina and Australia

India’s trade deficits with 6hina and Australia are unli"ely to reduce in the foreseeable future.Imported components from 6hina will continue to remain an efficient source of intermediates for Indian manufacturing. As Indian manufacturing pic"s up momentum in the coming months,imports of machinery and e$uipment from 6hina are e+pected to see a corresponding increase.5imilarly, import of coal from Australia is going to increase as Indian industry continues to grow.Increased industrial activity will increase demand for electricity. /ith most of India’s electricity plants being coal-fired thermal units, coal will be in heavy demand. Initial estimates indicate thatcoal imports might increase to million tonnes 'mt* in the financial year 2- from 2; mt in

24-.

It is ironic that, despite having the world’s fourth largest coal reserves, India’s power plants relyheavily on imported coal. 5upply of domestic coal is affected by :aoist activities in India’s coal-rich states of (rissa, 6hattisgarh, >har"hand and :adhya ?radesh. :ost private power producersare finding imported coal an easier option instead of sourcing it domestically. The public sectorgiant 6oal India Gimited’s domestic procurement has also run into difficulties, thereby affectingthe outputs of state-owned power corporations.



And as for gold, it is unli"ely imports of gold will decline, given India’s insatiable domesticdemand. %oing by the 5terlite Industries’ ac$uisition of a Jueensland gold mine and coppermines in Tasmania, Australia may be a happy hunting ground for India’s gold and mineral prospectors.

It is important to understand that trade is a two-way street. In a globalised world, producers willresort to imports on price and $uality grounds as long as such options are available. India’sindustrial producers are not an e+ception. India’s trade imbalances with Australia and 6hina areoutcomes of rational responses. 5uch imbalances will continue until India can offer its industrial producers home-grown alternatives of the same $uality at competitive prices.

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Internation Trade